Built to Last: How Fishbowl Is Building a Company to Survive 100 Years and Beyond

Fishbowl (www.FishbowlInventory.com) is a midsize business based in Orem, UT and it produces Fishbowl Inventory, the most popular inventory management solution among QuickBooks users. Fishbowl Inventory is also a great standalone tool for organizations that are looking to track their assets. CEO David Williams (@DavidKWilliams) and President Mary Scott (@MaryMichelleS) recently took some time to chat with Ascent Advisor.

Peter Wride – Ascent Advisor: You recently co-authored an article in the Harvard Business Review entitled “Leadership Teams: Why Two Are Better Than One.” How did this innovative leadership style come about at Fishbowl and what benefits have you seen?

David Williams – CEO at Fishbowl

David: Our developers achieved great success with the XP agile methodology and we decided to add a little “Fishbowl flavor” to the methodology and implement in all our departments and also directly in to the DNA of the company. The results have exceeded our expectations and we have soared as a whole. Our teams have eliminated communication barriers and they have learned to trust one another and work more closely together to accomplish great things for Fishbowl.

We follow the methodology of paired leadership across the board. Mary and I lead out as a team. Neither of us is more important than the other when it comes to making decisions. We have amazing debates over almost everything and we push back and forth on issues we really care about. What emerges from these creative discussions is a third alternative, which is always better than either one of us could have come up with on our own. We’ve seen that happen time and time again, like when we worked together to obtain funding and the stock for the company. We wanted to apply it in every department, and it’s working wonderfully.

Paired leadership also allows our company to be more agile and effective in everything we do. There are six captains over three departments. They meet together weekly and discuss the day-to-day tactics that need to be developed and deployed. Mary and I work on the vision, strategic partnership and long-term strategies for growth of the company. This practice enables us to be way out in front doing things that can bring in new revenue opportunities, forming new partnerships, and strengthening the parts of our company that we feel need it most. We work on establishing a strong foundation for everyone to build on so they can focus on what they do best.

Leaders must delegate fully. You can’t delegate and then yank people back if they make a mistake. On certain things they know we need to come together and make some strategic decisions. For day-to-day items, we trust our captains to run the business wisely.

Ascent Advisor: How did you implement paired leadership? What were some of the challenges that you faced?

Mary Scott – President at Fishbowl

Mary: We grew into it naturally over time. We planted the seeds of successful and enduring leadership and nurtured them. We gave them seven non-negotiables: respect, belief, trust, loyalty, commitment, courage and gratitude. The non-negotiables grew one by one out of the experiences within Fishbowl. They unite us as a team and they bring out the best in ourselves, our leaders and everyone at Fishbowl.

We believe that leaders should be focused on serving rather than controlling. David and I created the seven non-negotiables and asked the captains to create the specific attributes to go along with each non-negotiable. We asked each captain to write the first thing that came to mind for each non-negotiable so that their DNA would be part of the legacy we are creating together. Their responses exceeded our expectations. Their inspiring words led us to believe that most of the world’s problems can be solved on 3×5 cards.

David and I shared with our leaders that our number-one priority is to create a positive “bowl” where people feel uplifted and happy. We would not sacrifice our employees’ well being to make a lot of money. The “Mary metric” we use to measure our success in this area is to count smiles on our employees’ faces, and their families’ faces, too.

Now we’re taking our non-negotiables to our customers, partners, vendors, and the world. It’s how David and I demonstrate that we’re not growing skyscraper big; we’re growing wide. And the nice thing is that by “being nice,” we continue to grow our profits by at least 65% every year.

Ascent: So qualitatively and quantitatively you get great results?

David: Both. Yes!

Mary: David is the left side of the brain and I’m the right. I cover the creative, people development side of the business. I’m the seed planter. David figures out how to grow the seeds. He is the analytical, financial powerhouse. In our development team, Kevin Batchelor is the artistic lead over program development and Heber Billings is one of the best scientific/engineering minds we’ve ever come across. In support and training, John Erickson is analytical and Dusty Miller makes sure the customers are taken care of. John David King comes up with great selling plans and Kirk Tanner brings them to life in marketing.

We develop some of the world’s best software and we’ve built a company that is successful. But more importantly, we are happy and we believe that creates the “magic” in the bowl. Happy people create good things, positive and innovative solutions and lasting legacies. I think some leaders have forgotten how to bring joy into the workplace. People who produce because they are afraid of losing their jobs might also create short-term products and business opportunities. Most of our engineers have cut their teeth at Fishbowl. They learned how to work in the development department here at Fishbowl, and they’re really proud of what they’ve created. I think that happy code makes a superior product.

David and I prefer to take the time to train young engineers and see what new ideas they’ll bring to the table. We hired an eclectic group of firemen, plumbers, electricians, actors – people with the right character who also had a certain aptitude in math and technical skills. We’ve trained them to be great developers.

David: Someone once made the observation about my employees, “You just have a bunch of misfits.” I had never thought of it from that perspective. We may not hire the typical person who walks in the door; instead, we hire people who we feel have good character and who are willing to stretch themselves with some training and experience and who will be loyal and committed for the long haul.

We just don’t lose people. We’re in the people business. People sometimes use that phrase loosely, but we really mean it. The only exit strategy we’ve ever considered is death. We’ve started using a hundred-year outlook. We have no idea even in five years how much technology will change, but we have built a solid foundation with the right people, and that will make all the difference. We’re not building a great company with the end goal to simply sell it to the highest bidder. We’re building a flexible organization that will be able to last through any challenge and take advantage of every opportunity that comes its way.

On the outside, Fishbowl may not look any different than other companies. But we really do things quite differently. We wanted to build a company where we could ask the spouse/significant other of any employee, “Does your spouse enjoy working at Fishbowl and are they happy and energized when they come home?” Our hope is that their answer is always a resounding “Yes!”

Ascent Advisor: David, in 2004 you were working with the majority owner of the company and visited Fishbowl – which was a small, struggling software development group that had just shrunk from 30 down to six employees – to close the company. After meeting with the employees, you asked the majority shareholder for a chance to turn things around. What drew you to the company?

David: Just one thing: that these were six good human beings who deserved a chance to succeed against all odds. And I couldn’t imagine why they would be hanging around, unpaid. I can’t really remember what they were working on, but they were trying to work! I saw that they had hope, and I didn’t want it to be in vain. I liked them!

After that day I was convinced that these guys were close to greatness. I had no idea how to create software, but I know good people when I see them, and I trusted what they were saying. I felt inspired to want to help.

QuickBooks was just opening up their marketplace for add-ons that we could work our inventory management solution into. That fortuitously happened about the same time I visited Fishbowl. So we qualified to get on the Intuit Marketplace the next month, and we were one of the first three developers in all of North America to be qualified as a gold developer add-on and suddenly POP! We started getting leads. And that’s how we started to get enough revenue to survive and eventually thrive.

Ascent Advisor: In December 2010 one of the majority shareholders created an opportunity for you to create an employee owned company. At one point you pulled all your employees together in your conference room to try to figure out how to make this a reality. Through record sales and last-minute financing, you were able to keep the company together. How does that change people’s accountability and engagement now that they feel more ownership?

David: There’s a feeling that’s maybe even more powerful than having a piece of paper that says I have some stock in this company: I’m willing to give whatever I have in order to stay here and keep us together for the long haul. That’s really the spirit that was present in that room when we were in our most game changing hour. Employees were pulling out credit cards, asking us to dive into their 401(k)s, offering to get a second mortgage, or pull money from their personal savings account. They all offered up their salaries, too. Anything they could do to keep the dream of Fishbowl alive.

After we were able to secure the stock, we rallied together and paid off the loan in six months (seven years early). This was our finest hour, and it’s a remarkable story that we are all a part of.

Mary: I hope that leaders outside of Fishbowl who read this article will feel inspired to take down some of the walls (literally and figuratively) in their organizations and discover how much employees really want to help their leaders and their company.

Ascent Advisor: Fishbowl is heavily involved in helping the community through programs such as the CAM Foundation and Grow America. What drives you to give back?

Mary: Only 2% of the world lives the way we live. Most of us in the U.S. have excess capacity like office space or leftover computers that we’re not using, or knowledge we can share with those underserved in our world. Utah is number one on the economic indicators right now. Let’s teach the world how to do it.

David: When Mary joined the company she brought all of her background in serving, caring, and providing world class certifications to the underprivileged. She introduced these programs into the CAM Center. It was really Mary who spearheaded the whole movement. It’s named after my son Cameron, who has passed. Mary has a gift for putting it together and she brings with her many years providing these services to the Navajo nation, single mothers, and veterans. You know what? After 5:00 this whole building is available. So why not use it for good?

Ascent Advisor: This is a unique company and culture. What do you do to attract, engage and retain great employees? How do you get them to “buy in” to the vision?

Mary: You have to have bought in to our seven non-negotiables before we make you an offer.

David: That was my answer. As we raise the bar with ourselves, we also attract a higher caliber of individual. There’s a natural reciprocity there that comes from the field. Maybe it’s our expectations – when we’re looking at résumés, we’re a little choosier about what qualifications are most important to us.

Ascent Advisor: What’s the biggest challenge you’ve had with the growth? What has been the thing that keeps you up at night?

Mary: We opted to be happy and not go crazy with growth, and we seemed to have gotten both.

David: Most leaders never believe is possible is that you can actually be debt free, and grow with your own cash flow. For Mary and I and our captains, our personal values are built around family first and living debt free. We never want the company to be encumbered with debt. We temporarily had to get a bank loan because we needed to purchase the stock back, and that was a welcome debt. As you can see, we don’t like debt, so we paid it off very quickly. I guess the thing that keeps me up at night is there is a trick on the cash flow management on the growth side because at the pace that we grow, we can burn our cash up really quickly. This is especially true when we’ve emptied all of our war chest in order to keep the company intact. Cash flow issues are usually a seasonal thing – how do you keep ahead of the game, do you have enough revenue coming in, can you do these things, can we expand here? Making important decisions like these is what keeps me up. You know what’s kind of fun, though? I’d rather have that than report to a board or to a VC because it’s all the bottom line. We don’t have those concerns, thankfully.

Mary: We send a report to all of our employees every day about where we stand financially. David has made a habit of paying off invoices as soon as they were received so the company could be debt free at the end of each day. He is transparent with our employees. If we have $25,000 in the bank after we make payroll, that’s all we have. This helps employees make requests for funds responsibly and intelligently.

Ascent Advisor: You take open-book management and put it on steroids.

David: Every employee knows how we’re doing financially. Open information like this makes us a stronger company.

Mary: We know where we were last year, where we’re supposed to be this year and how we’re doing at meeting our goals. You have to know how to move with your “seasons” within your organization.

David: This allows employees to be exposed to the data, whether it’s good or bad, and rally around that information. They want to know. And they’re smart! They can figure things out!

Ascent Advisor: What is the vision for Fishbowl?

David: We have a hundred-year vision. You make sure your house is built strong and you have the right people inside. It doesn’t necessarily matter what we’re going to be doing, we just know that if we have the right people driven by the right reasons, we’ll always do well.

Ascent Advisor: What’s something that you face as leaders that you wish employees understood better?

David: I think just being a younger group, our employees love our vision. I don’t know if they know how it translates into outcomes yet. It’s not a problem, it’s just a process that we’re going through.

Ascent Advisor: You stated above that you have no exit strategy. What does that view of the future do to the way you work?

David: I think that it allows employees to see the importance of making sure these behaviors are a part of our everyday dispositions. We don’t just do this for a short season. No, this is our hundred-year strategy. If you teach them correct principles, they govern themselves. Well, we don’t do that very well as parents: we like to still govern. But we’re really good here at teaching the correct principles and then trusting them to govern themselves wisely. Mary often points out that on the other side of failure is an opportunity. And if we can keep teaching our employees that and giving them all the tools to put it into practice, then we can simply get out of their way and let them make amazing things happen.

Mary: If leaders can trust and create that freedom and space, it is amazing how your employees will consistently exceed your expectations.

Ascent Advisor: What is on the horizon for Fishbowl?

David: We’ve developed several new technologies that we will expand, especially mobile devices and services offered in the cloud. We strive to take the same approach as Apple: they enjoy steady revenue growth, and as soon as it starts to flatten a little bit, they pop out another product. They have this amazing ability to sense the perfect time to do that. We want to do that, too. Even though we’re still selling Fishbowl Inventory mainly as a server-based desktop application, we’re swiftly moving toward more Web-based and cloud-based solutions. As we move into this new technology, we have a lot to learn a lot of new things at a fast pace. We didn’t hire someone to come in with that knowledge; our good group of developers went out and figured it out for themselves. We released our first cloud-based technology about two months ago and it’s already selling like crazy. Our vision is to continue to build products and services that help manufacturers and wholesale distributors become more efficient. Whether that’s through new technology, new devices, more user-friendly features, real-time reporting, etc., we’ll keep doing our best to stay on the cutting edge to better serve our customers. We want to be the best of class at doing that, for a hundred years and beyond.